A troubled nuclear family


PAUL KAIHLA August 7 1995

A troubled nuclear family


PAUL KAIHLA August 7 1995

A troubled nuclear family



From a distance, the white dome poking through the evergreen treetops looks a bit like a shiny golf ball embedded in a sea of grass. A forgotten monument of Canada’s atomic age, the dome sits a stone’s throw from a forlorn stretch of Lake Huron shore-line, 190 km northwest of Toronto. Among over-grown shrubs and weeds is a sign announcing, “Douglas Point Nuclear Power Station”—the world’s first commercial CANDU reactor. In its day, the facility was a showcase of Canadian technological achievement. It took eight years and $91 million of public funds to construct. Visiting dignitaries from around the globe marvelled at the plant and its main computer, which was the size of a bedroom. And when Douglas Point went into service in 1968, it was to supply electricity for 30 years.

But as with so many things in Canada’s half-century adventure in the nuclear era, the Douglas Point reactor failed to live up to its early promise. The plant’s operating life was a mere 17 years, and it lost money for 15 of them. Its average output over that period was 54 per cent of capacity, largely because of shutdowns for costly repairs. In 1984, Atomic Energy of Canada Ltd. (AECL), the federal Crown corporation that owns Douglas Point, pulled the plug rather than face a bill as high as $230 million to replace damaged pressure tubes. Ontario Hydro, the plant’s operator, studied the option of purchasing the facility from the federal agency for a token $1, but concluded that it was not even worth that. Since then, the reactor has been stripped of its uranium, but its machinery will remain radioactive for centuries. Its spent fuel is sealed inside 46 concrete silos near the beach—and will remain there until AECL wins approval for a safe method of permanently storing radioactive waste. “I had a lot of affection for Douglas Point,” recalls 73-year-old Charles Mann, who worked there as a technician and trainer for two decades. “Just like they say about the chap who first stepped on the moon, it was a giant leap for the nuclear industry.”

While radioactive fallout was still raining on Hiroshima and Nagasaki 50 years ago this week, Canadian scientists and politicians were full of big ideas for that industry. Summing up the “fantastic dreaming” at the time about the prospect of harnessing atoms for peace, the May 15, 1946, issue of Maclean’s recited a host of predictions: “Power pills will keep planes in the air and ocean liners endlessly plowing the seas, without need to refuel; all industrial production will be geared to atomic energy, which will be almost as free as air, until everything from homes to baby buggies will be within pocketbook range of the humblest Zulu tribesman.”

To fuel the new society of abundance and leisure, officials predicted that Canada would have at least 100 nuclear reactors by 1999. As late as 1969, the thenchairman of Ontario Hydro, George Gathercole, wrote that his province alone would need the equivalent of 160 reactors by the end of the century.

In fact, with less than five years until the next millennium, Canada has only 22 commercial nuclear reactors: one each in Quebec and New Brunswick, and 20 reactors run by Ontario Hydro. No government or utility in the country is currently planning to commission any more—and in fact, Ontario Hydro’s current chairman, Maurice Strong, says that the utility’s existing reactors have proved to be a poor financial investment. That the big dreams for nuclear power in Canada have failed to materialize is an understatement. But one thing is clear: the country’s five-decade-long nuclear experience has run up a big bill. AECL, the agency created in 1952 to develop and market the CANDU (short for Canadian deuterium uranium), has received about $5 billion in federal tax dollars, according to its own accounting. But a 1988 report by the House of Commons standing committee on energy pegged federal subsidies for nuclear research and development between 1946 and that year at $7 billion. George Lermer, dean of the faculty of management at the University of Lethbridge in Alberta and author of a 1987 study for the Economic Council of Canada on AECL, says that the actual figure is more like $10.4 billion in 1995 dollars when inflation and related expenditures are taken into account. That is


more than twice as much as has already been spent on the Hibernia offshore oil megaproject

AECL’s chairman, Robert Nixon, defends the subsidies—and the $ 180-million parliamentary appropriation his agency received this year—arguing that the nuclear program has proven a good investment for Canadian taxpayers. “The spinoffs for the high-tech sector, and engineering firms that get contracts as a result of our foreign sales, are about five to seven times the amount of money that has been invested,” the former Ontario treasurer said last week from AECL’s Mississauga office, one of 15 locations the Crown corporation maintains across North America. He pointed to a 1993 study by the accounting firm of Ernst and Young that concluded that AECL’s research and development has stimulated $23 billion worth of activity in the Canadian economy during the past 30 years.

But critics charge that Canada’s nuclear enterprise is a sorry legacy of scandals, technical failures and financial losses—and that it is time for Ottawa to reconsider its support. “We have invested all of this money for all of these years and what have we got?” says University of Toronto historian Michael Bliss. “CANDU reactors we can’t sell to anybody and white elephants at Ontario Hydro.” Adds Winnet Boyd, a 79year-old engineer who was the chief designer of the precursor to the CANDU reactor: “I don’t think it’s a good investment.” Then, referring to the celebrated Canadian car misadventure in the 1970s, he added: “We backed a loser, just like New Brunswick backed the Bricklin.”

In his 1987 study, economist Lermer recommended that AECL be privatized. And although he stands by that conclusion today, he doubts that the government could find a buyer. Lermer says that the agency has lost money over its 43-year lifetime even if the federal subsidies are considered as earned income, a point Nixon acknowledges. Using a standard economic formula, Lermer adds that the “opportunity cost” of the accumulated subsidies for nuclear research is $73 billion in 1995 dollars— what the subsidies would now be worth if the government had invested them in money-making ventures instead. An added cost looming in the future is the estimated $9 billion AECL says it will take to clean up and permanently store the spent fuel rods, which contain the radioactive byproduct of the fission process. They are currently stored at Canada’s

reactor sites. “A lot of public resources have been wasted,” says Lermer.

But when Canada’s pioneering physicists and engineers embarked on the nuclear mission after the Second World War, there was broad public support for the idea of spending tax dollars on nuclear technology. The seeds of Canada’s nuclear program lay in two secret research reactors constructed in Chalk River, Ont., 160 km northwest of Ottawa, at the end of the war. The larger one was intended to produce plutonium for use in the atomic bomb, but the war ended before its completion. Canadian experts then focused on commercial uses for the powerful new technology, while the other members of the nascent nuclear club—the United States, the Soviet Union and Britain—all funded massive weapons programs. “I didn’t want to be working on a military program,” recalls 84-year-old Donald Hurst, a physicist who worked at the Chalk River labs for two decades. “Civilian use is what we went for, and we were proud of it.”

Despite that, Canada’s early research reactors did produce plutonium, which was sold to the United States after the war for its nuclear arsenal. But in 1952, the federal government created AECL to develop a nuclear reactor that could heat water, create steam and drive a turbine to generate electrical power. “We knew there was an enormous amount of people around the world with a low standard of living,” recalls Hurst, who was AECL’s director of reactor research and development from 1961 to 1965. “We saw the CANDU filling our power needs and theirs.”

The CANDU reactor was distinct from those being developed in other countries. It was powered by natural uranium, eliminating the need to enrich the mineral at great expense, and could be refuelled without shutting it down. “We went our own way and developed a better, safer, smarter reactor than the Americans,” says Alastair Gillespie, who oversaw the nuclear program as federal Energy minister between 1975 and 1979. Adds James Guillet, a retired University of Toronto chemist and inventor who holds more than 100 patents: “The CANDU reactor system is the highest accomplishment of Canadian technology—ever.”

But Canada’s efforts to export that technology were troubled from the start. In 1956, then-Extemal Affairs Minister Lester Pearson announced plans to give India a CANDU research reactor as a foreign aid gesture, at

a cost of $9.2 million. In 1963, India repaid the favor by ordering a commercial reactor—AECL’s first export sale, albeit heavily subsidized. Among other things, Canada provided free training for 271 Indian scientists and technicians. “We were trying to help a Third World

country progress, says Mann, who trained several of the Indians at Douglas Point. In 1966, Pakistan complained to the United Nations that India was using the technology to develop a nuclear weapon. The External Affairs minister at that time, Paul Martin Sr., father of Canada’s current finance minister, dismissed the concerns. But on May 18, 1974, India shocked the world by detonating a bomb about the size of the one dropped on Hiroshima in an underground test in the desert of Rajasthan state.

‘When I was training them,

I’d actually had one of their engineers living in my house,” recalls Mann. “I didn’t know it was a betrayal until after it happened.”

Since 1963, AECL’s export record has been anemic.

After India, the list of the agency’s foreign customers reads like a rogues’ gallery.

At the time they placed their first orders, they all had questionable humanrights records: Pakistan in 1965, South Korea and Argentina in 1974, Romania in 1978. In its 43-year history, AECL has signed contracts to build 13 reactors abroad, but that record is fraught with controversy.

AECL says that the agency has turned a profit in all of those sales. But Lermer insists that the corporation lost money on the transactions, with the possible exception of the Romanian contract, because of subsidized loans and cost overruns.

In some cases, AECL bent the rules to close a sale. In 1976, the agency paid a shadowy Israeli businessman, Shaul Eisenberg, $18.4 million for his work as “exclusive agent” in the sale to South Korea. But the federal auditor general publicly questioned the payment, and investigators suspected that some of the money had been used to bribe foreign officials. Last week, Gillespie, who was the minister responsible for AECL at the time, said that to this day he still does not know how the money was used or what happened to Eisenberg. In 1980, The New York Times called Eisenberg “the wealthiest man in Israel as a result of the multimillion-dollar deals he has welded.” In another scandal, Argentinian investigators confirmed in 1985 that the country’s former economics minister, Jose Ber Gelbard, had received a payment of $2.5 million—deposited in his Swiss bank account—five days after negotiating an agreement with AECL to buy a CANDU reactor in 1974. AECL said that the payment to Gelbard, who died in 1977, was made by its Italian partner without its knowledge.

Last year, the Crown corporation fired its South Korean agent after he told investigators in that country that he paid $345,000 to the former head of Korea Electric Power Corp. in connection with the 1992 sale of two CANDU reactors to the state-owned utility. The recipient of the payoff, Ahn Byong-hwa, is now serving a three-year jail term for accepting bribes, while the ex-AECL agent, Park Byong-chan, faces a possible minimum 10-year sentence for bribing a government official.

A controversy of a different nature erupted over the reactor project in Romania after revelations in 1990 that laborers on the CANDU site

worked in slave-like conditions. The first Romanian reactor will go into service in October, but construction on the other four has been halted for lack of funds—and Nixon says that three of them may never be built.

By far, the most dependable customer of CANDU reactors has been Ontario Hydro. Between 1964 and 1993, the publicly owned utility built 20 CANDU reactors for southern Ontario, which now supply about half of the province’s electricity. But the reactors have been plagued with difficulties. The newest generating station, a complex of four reactors 40 km east of Toronto in Darlington, was originally budgeted at $3.5 billion. In the end, it cost $15 billion. In nearby Pickering, two reactors required new pressure tubes in the early 1980s—at a cost of $720 million. At another massive generating station adjacent to the old Douglas Point site, one of four reactors will be closed indefinitely next month because it requires an expensive overhaul. And this past December, an accident at the Pickering site created a public stir when 140 tons of radioactive heavy water spilled onto the reactor floor.

On top of those technical problems, Ontario Hydro chairman Strong told Maclean’s last week that the utility’s reactors have proven to be a poor investment The 20 reactors have cost a total of $30.8 billion, but

Strong says that they will likely only produce $18 billion worth of electricity during their lifetime. “The figures don’t lie,” says Strong, adding that the utility has “had to take a major haircut” on its nuclear assets. “I don’t want to second-guess my predecessors, because their decisions were generally supported. Frankly, if we had put as much money into alternative sources of energy as we have into nuclear, I think some of those alternatives would be much further advanced than they are.”

One of Strong’s first acts when he assumed his post in 1992 was to cancel 12 new reactors slated for construction because Ontario Hydro was already carrying excess capacity. In an interview, he argued that the federal government should merge AECL with Ontario Hydro’s nuclear division, and make it a self-sufficient entity. “I believe that nuclear energy, like any other source of energy, needs to stand on its own economically,” said Strong. “A merger is feasible, and there should not be a continuing need for government subsidy.” Nixon, however, says that Parliament should maintain its supportin part, because AECL has several prospects for profits from reactor sales in the rapidly developing Asian market (the agency expects to sell two CANDUs to China, and is bidding on a contract to build two more in South Korea) as well as in Turkey and Egypt. Norm Rubin, a longtime critic of the agency and director of nuclear research for the Toronto-based environmental watchdog Energy Probe, says that while there may be a market, it remains questionable whether AECL will get a share of it—and make money on the sales. “It’s not that AECL is badly managed, or that they’ve turned a winner into a loser,” says Rubin. “The problem is that nuclear power is a technology that cannot pay for itself.” Even many officials at Ontario Hydro agree with that statement. In the present climate of government spending cuts—and after 50 years of losses, scandals and failed promises—enthusiasm for Canada’s nuclear adventure may finally be wearing thin. □

The CANDU program has been plagued by scandals, losses and failures